Bhotekoshi Floods Cause Rs 600 Million in Direct Damage to Bank Branches

The floods that struck Nepal’s Rasuwa district destroyed 15 bank branches and heavily damaged another, turning a disaster for local communities into a major banking-sector loss. The Nepal Bankers’ Association put the direct physical damage at about Rs 600 million, excluding cash.

Sixteen branches operated in the affected areas, representing 12 banks. Together, they served 78,204 depositors and held Rs 4.5 billion in deposits. Nine ATMs contained Rs 11.663 million in cash, while vaults held Rs 172.4 million and cash counters held Rs 11.7 million. The association said this money was insured and therefore did not form part of the physical-loss estimate.

Anil Sharma, chief executive of the Nepal Bankers’ Association, said banks faced another risk beyond damaged buildings and equipment. "Banks had extended loans against land as collateral in the affected areas. Now there is a situation where the collateral itself may no longer exist," he said. The affected branches had 2,125 borrowers, with combined lending of Rs 2.43 billion, excluding loans to hydropower projects.

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The physical damage to branch offices, excluding cash, appears to be around Rs 600 million.

Agricultural Development Bank reported the largest damage. Its Trishuli branch was destroyed, and 64 customer locker boxes were damaged. The association did not include the contents of those lockers because banks do not insure them and do not know what customers stored inside. Gold pledged as loan collateral is insured and was also excluded from the loss estimate.

Branches belonging to several other banks, including Citizens Bank, Global IME Bank, Himalayan Bank, NMB Bank and Sanima Bank, also suffered damage. Prabhu Bank had two affected branches, while NIC Asia Bank and Nepal Investment Bank had three each. The association said 26 bank employees remained unaccounted for after several branches were completely destroyed.

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Banks had extended loans against land as collateral in the affected areas. Now there is a situation where the collateral itself may no longer exist.